January 21, 2025 • 9 mins
Netflix closed 2024 with its biggest quarterly subscriber gain in history, benefiting from its first major live sporting events and the return of Squid Game.
The company added 18.9 million customers in the fourth quarter, according to a shareholder letter Tuesday. That was more than double what Wall Street expected and brought global subscribers at Netflix to more than 300 million. The company’s previous best was 15 million in the first quarter of 2020 — numbers driven by the onset of the coronavirus pandemic. For instant analysis and reaction, hosts Carol Massar and Tim Stenovec speak with Bloomberg Technology Co-Host Caroline Hyde and Bloomberg Intelligence Technology and Media Analyst Geetha Ranganathan.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news, Netflix shares soaring after
they boosted their revenue out look. Carol, One thing that's
kind of surprising to me, which part is the first
quarter outlook doesn't seem to be affecting the way the
stock is moving. First quarter operating income therefore projecting two
point nine to four billion, analysts wanted to see three
(00:24):
point one three billion dollars. First quarter operating margin expected
to be twenty eight point two percent. Analysts wanted to
see twenty nine zero point eight percent.
Speaker 2 (00:32):
Maybe they're looking at the twenty twenty two revenue overall
and looking at the big number versus kind of the breakdown.
Speaker 1 (00:37):
See revenue projections coming in light, first quarter EPs coming
in light. I guess you are shrugging that off.
Speaker 2 (00:42):
But they see twenty twenty five revenue maybe a little
bit better than what was initially expected. So maybe that's
the hope.
Speaker 3 (00:48):
I don't know.
Speaker 2 (00:49):
Let's see what Caroline Hind has to say. She's co
host of Bloomberg Technology and she joins us. Now, Caroline,
I mean, there's also the buyback in shares. But Netflix
just soaring in the aftermark.
Speaker 4 (01:01):
What a way to close out your subscriber numbers, because
this is the last time we ever get them. The
last quarter of subscriber numbers an absolute blowout, as you say,
coming in double where the expectations have been of eighteen million,
and they've added an on net forty one million.
Speaker 5 (01:16):
More people around the world over the course of this year.
Speaker 4 (01:18):
I mean, this is better than they did during twenty
twenty in the onset of COVID, when we were all
suddenly trapped in our homes and had nothing else to.
Speaker 5 (01:25):
Do but to switch on and pay for Netflix.
Speaker 4 (01:28):
Extraordinary numbers, And I think, Carol, what you're saying is
really president the fact that they're looking to a full
year that still looks so strong. Operating margin going to
live up to twenty nine percent. I hear you, Tim
on the fiscal first quarter perhaps looking a little bit light.
But remember this is a company that promised us for advertising,
which has been slow to bear fruit.
Speaker 5 (01:46):
Isn't actually going to give.
Speaker 4 (01:47):
Us a real substantiate and financial hit and oop until
twenty twenty six.
Speaker 5 (01:52):
But already you're seeing.
Speaker 4 (01:53):
Those dividends, Already you're seeing people pile into the advertising product.
And thank you to j Paul, to Mike Tyson, to
be on because this is where it's at.
Speaker 5 (02:01):
It seems to be live programming. What are you winning
it for?
Speaker 1 (02:03):
Yeah, I was gonna say no boxing matches or Beyonce
happening during the pandemic either. So maybe that's one of
the big shifts. Someone, do you want to bring in?
Getha ranganathen technology and media analysts for Bloomberg Intelligence. Just
to repeat some of these headlines here, Netflix shares are
soaring more than a ten percent. They boosted their twenty
twenty five revenue outlook. They added eighteen point nine one
(02:24):
million dollars a million excuse me, net paid streaming users
in the fourth quarter. Estimates were for nine point one
point eight so more than doubling it there, Githa, You've
had about ten minutes to look at these results. What
jumps out to you?
Speaker 5 (02:37):
Yeah?
Speaker 3 (02:38):
Everything? Really everything what you just pointed out. You know,
the one thing that we were worried about coming into
this quarter was whether they were going to take down
their revenue expectations just kind of given the strength and
the dollar, but they actually boosted that and you know,
you talked about the live sports being such a big
part of this eighteen point nine million subscriber blowout, and
it's going to be interesting to see how they go
(02:58):
ahead with both criber acquisition and retention. So they do
have WWE programming that came on, you know, starting January
of this year, and that's a really interesting retention strategy
because you do do have that programming kind of come
in a week in and week out, and so it's
going to be interesting to see how they kind of
shape the conversation forward. The one big thing that you know,
(03:19):
everybody was kind of looking at and you know, we
still haven't gotten any inkling about is the price hikes.
So that's again another big positive lever that they have
to pull sometime through this year, especially kind of given
that this is going to be their strongest ever content
pipeline year twenty twenty five with all of their you know,
hit shows returning.
Speaker 2 (03:40):
Hey, before we go back to Caroline, I have one
question for you, Geita. I mean this, you know, the
live sports programming, the live programming in general, it's expensive,
isn't it. So that's a lot of pressure that I mean,
Netflix really has to make sure that they've got the
eyeballs that make it pay off.
Speaker 3 (03:57):
It did pay off for them, so just let's just
take the NFL for instance, they spent about seventy five
million dollars per game. We estimate that they brought in
well over one hundred million just an AD revenue, and
then think of all of those additional subscribers that they got.
So this is paying off for them big time. So
they're making it. The content investments are definitely big, but
they're pretty disciplined, Carol, and I think the ROI they're
(04:20):
going to find is really really good as well.
Speaker 1 (04:22):
Hey, Carolyn, to that point, Netflix certainly the early mover
when it comes to this. I think it's fair to
say they certainly invented a category here. But since then
you've had companies like Max, Paramount, Peacock from NBC Universal
all come out with their own streaming products to much
less success. Disney, of course, we've got to throw that
(04:43):
one in there as well. What is Netflix doing so
well that the other companies are not necessarily doing.
Speaker 5 (04:52):
Very good? Point and leaving them the dust.
Speaker 4 (04:54):
I mean, Leatha's numbers is so stand out when you
think about this is a company with three hundred million
subscribers worldwide, leaving Disney just way behind, less than half
of what they've currently been able to crow about.
Speaker 5 (05:06):
But I think it's just the heavy mix.
Speaker 4 (05:09):
Of being able to offer you the right content at
the right time and the right price format. They're making
big inroads into Latin America and into Europe as well
as into the United States.
Speaker 5 (05:17):
Which really surprised me.
Speaker 4 (05:18):
Was how strong the US and Canada are in the
face of those price heights. But I think most notably
it is the fact that they keep on delivering, whereas
it's carry On is a great movie that people have
flocked to, whether it's these ongoing franchises that people cannot
get enough of Wednesdays coming out with more, we're going
to be getting.
Speaker 5 (05:34):
A new stranger things.
Speaker 4 (05:35):
These are people that a lot loaded on these particular
types of content and the genre that they feel so
comfortable with. And I wonder, and it's one more for
Geetha really is how much we're going to see cyclical
nature of.
Speaker 5 (05:46):
People signing on and signing off when it comes to sports,
because that is.
Speaker 4 (05:49):
What is that the behest and what has so been
the issue for the likes of Warner Brothers and Disney
is that you basically turn on when it's your season
and then you switch.
Speaker 5 (05:57):
Off again and you have this huge jump starts in numbers.
Speaker 4 (06:00):
All were going to see that consistency when you do
have the deals of rule for example, ps my producer
Jackie absolutely loves.
Speaker 5 (06:06):
The new role. So ass you say they're winning on
the WWE front, Keitha.
Speaker 2 (06:10):
Come on in on that talk to us about the
cyclical cyclicality or not nature of sports.
Speaker 5 (06:16):
Yeah.
Speaker 3 (06:16):
No, that's a great point that Caroline brought up, and
we've seen that happen every time during football season, right,
people just sign up for all these services and then
after the Super Bowl you have so much of this
what is called churn and burned.
Speaker 4 (06:27):
Right.
Speaker 3 (06:28):
But that's where I think Netflix is going to do
things a little bit differently. So they're going to use
a combination of these big, splashy events think of you know,
Tyson versus Paul or even the NFL games where you know,
you can go out and acquire all this huge bunch
of subscribers, and then you have you know, consistent weekly
programming like WWE. The next thing that's really coming up
for renewal is UFC, which is again year round programming,
(06:51):
which then you know, forces people to come back week
after week to watch their favorite shows, and I think
that's how they're going to They've always kind of strived
for this nice mix, you know, whether it's English non
English content, you know, whether it's licensed original content, and
now it's going to be you know, kind of this
live sports, the one off events versus you know that
year round programming.
Speaker 1 (07:12):
Githa, before we let you go, you're an analyst for
Bloomberg Intelligence. You cover technology and media. You like having
more data rather than less data. Unfortunately, you're going to
get less data from Netflix moving forward because they're not
going to report this customer metric anymore. What are you
going to use to back out that figure? What should
(07:33):
we be looking at?
Speaker 3 (07:34):
Yeah, definitely, I mean revenue is how they have been
kind of training as revenue growth is going to be
the big number going forward. It's going to be interesting
to see if they give any metrics tim around advertising
at all, because we will kind of need that a
little bit to see if that add our poo number
is climbing up or not. But yeah, we're going to
have to make some guestimates in terms of subscriber numbers.
(07:56):
But yes, revenue and operating margin, I think those are
going to be the major metrics that investors are going
to be focused on going forward.
Speaker 2 (08:02):
Hey, before we go, Caroline, I did want to get
you to weigh in on We are anticipating an announcement
by President Trump and building artificial intelligence infrastructure here in
the United State. It's a big joint venture. We've seen
some stacks like Oracle move on it. What do we
know or what might we expect?
Speaker 5 (08:20):
It's so interesting, isn't it?
Speaker 4 (08:21):
Because it was but a few weeks ago that Masayoshi's
son was on stage with Trump congratulating him on his
presidential win and promising one hundred million dollars into AI infrastructure.
And here we get it, one hundred million maybe going
up to five hundred million dollars with soft Bank, open
Ai and Oracle. There are so many questions here because
what Oracle is going to be stealing some of Microsoft's
lunch here? Because remember open Ai tends to depend on
(08:43):
Microsoft for its cloud infrastructure at the moment. But we
understand from reporting of our own colleagues that there's been
some frustration by open Ai and Microsoft not being able
to build out as quickly as enough as they would
like and having to go elsewhere for their compute power
for their latest large language models. This is exactly what
the President now wants to be laying out money coming in,
particularly from the foreign investment like SoftBank, and committing to
(09:06):
building infrastructure here in the United States, and remember it's
going to have to have the energy that goes alongside it.
But big move for Oracle Stock, big important cloud growth
driver for them. But also really interesting tie up between SoftBank,
which has been taking more and more of a stake
in open Ai by buying up some of those shares
on the private market and tender office coming from employees
and indeed leaving me with questions about Microsoft. But we
(09:29):
do anticipate that unveiling at the White House today.
Speaker 2 (09:31):
All right, looking forward to that great setup for us
as we anticipate that in great analysis from both of you.
When it comes to Netflix, we are watching the stock
continuing to trade soaring really in the aftermarket, up about
eleven percent as we speak. Our thanks to Caroline High,
co host of Bloomberg Technology, and of course our Githa
Rang andath On. She is technology and media analyst for
Bloomberg Intelligence. We'll all be reading her research
Bloomberg Audio Studios, podcasts, radio news, Netflix shares soaring after
they boosted their revenue out look. Carol, One thing that's
kind of surprising to me, which part is the first
quarter outlook doesn't seem to be affecting the way the
stock is moving. First quarter operating income therefore projecting two
point nine to four billion, analysts wanted to see three
(00:24):
point one three billion dollars. First quarter operating margin expected
to be twenty eight point two percent. Analysts wanted to
see twenty nine zero point eight percent.
Speaker 2 (00:32):
Maybe they're looking at the twenty twenty two revenue overall
and looking at the big number versus kind of the breakdown.
Speaker 1 (00:37):
See revenue projections coming in light, first quarter EPs coming
in light. I guess you are shrugging that off.
Speaker 2 (00:42):
But they see twenty twenty five revenue maybe a little
bit better than what was initially expected. So maybe that's
the hope.
Speaker 3 (00:48):
I don't know.
Speaker 2 (00:49):
Let's see what Caroline Hind has to say. She's co
host of Bloomberg Technology and she joins us. Now, Caroline,
I mean, there's also the buyback in shares. But Netflix
just soaring in the aftermark.
Speaker 4 (01:01):
What a way to close out your subscriber numbers, because
this is the last time we ever get them. The
last quarter of subscriber numbers an absolute blowout, as you say,
coming in double where the expectations have been of eighteen million,
and they've added an on net forty one million.
Speaker 5 (01:16):
More people around the world over the course of this year.
Speaker 4 (01:18):
I mean, this is better than they did during twenty
twenty in the onset of COVID, when we were all
suddenly trapped in our homes and had nothing else to.
Speaker 5 (01:25):
Do but to switch on and pay for Netflix.
Speaker 4 (01:28):
Extraordinary numbers, And I think, Carol, what you're saying is
really president the fact that they're looking to a full
year that still looks so strong. Operating margin going to
live up to twenty nine percent. I hear you, Tim
on the fiscal first quarter perhaps looking a little bit light.
But remember this is a company that promised us for advertising,
which has been slow to bear fruit.
Speaker 5 (01:46):
Isn't actually going to give.
Speaker 4 (01:47):
Us a real substantiate and financial hit and oop until
twenty twenty six.
Speaker 5 (01:52):
But already you're seeing.
Speaker 4 (01:53):
Those dividends, Already you're seeing people pile into the advertising product.
And thank you to j Paul, to Mike Tyson, to
be on because this is where it's at.
Speaker 5 (02:01):
It seems to be live programming. What are you winning
it for?
Speaker 1 (02:03):
Yeah, I was gonna say no boxing matches or Beyonce
happening during the pandemic either. So maybe that's one of
the big shifts. Someone, do you want to bring in?
Getha ranganathen technology and media analysts for Bloomberg Intelligence. Just
to repeat some of these headlines here, Netflix shares are
soaring more than a ten percent. They boosted their twenty
twenty five revenue outlook. They added eighteen point nine one
(02:24):
million dollars a million excuse me, net paid streaming users
in the fourth quarter. Estimates were for nine point one
point eight so more than doubling it there, Githa, You've
had about ten minutes to look at these results. What
jumps out to you?
Speaker 5 (02:37):
Yeah?
Speaker 3 (02:38):
Everything? Really everything what you just pointed out. You know,
the one thing that we were worried about coming into
this quarter was whether they were going to take down
their revenue expectations just kind of given the strength and
the dollar, but they actually boosted that and you know,
you talked about the live sports being such a big
part of this eighteen point nine million subscriber blowout, and
it's going to be interesting to see how they go
(02:58):
ahead with both criber acquisition and retention. So they do
have WWE programming that came on, you know, starting January
of this year, and that's a really interesting retention strategy
because you do do have that programming kind of come
in a week in and week out, and so it's
going to be interesting to see how they kind of
shape the conversation forward. The one big thing that you know,
(03:19):
everybody was kind of looking at and you know, we
still haven't gotten any inkling about is the price hikes.
So that's again another big positive lever that they have
to pull sometime through this year, especially kind of given
that this is going to be their strongest ever content
pipeline year twenty twenty five with all of their you know,
hit shows returning.
Speaker 2 (03:40):
Hey, before we go back to Caroline, I have one
question for you, Geita. I mean this, you know, the
live sports programming, the live programming in general, it's expensive,
isn't it. So that's a lot of pressure that I mean,
Netflix really has to make sure that they've got the
eyeballs that make it pay off.
Speaker 3 (03:57):
It did pay off for them, so just let's just
take the NFL for instance, they spent about seventy five
million dollars per game. We estimate that they brought in
well over one hundred million just an AD revenue, and
then think of all of those additional subscribers that they got.
So this is paying off for them big time. So
they're making it. The content investments are definitely big, but
they're pretty disciplined, Carol, and I think the ROI they're
(04:20):
going to find is really really good as well.
Speaker 1 (04:22):
Hey, Carolyn, to that point, Netflix certainly the early mover
when it comes to this. I think it's fair to
say they certainly invented a category here. But since then
you've had companies like Max, Paramount, Peacock from NBC Universal
all come out with their own streaming products to much
less success. Disney, of course, we've got to throw that
(04:43):
one in there as well. What is Netflix doing so
well that the other companies are not necessarily doing.
Speaker 5 (04:52):
Very good? Point and leaving them the dust.
Speaker 4 (04:54):
I mean, Leatha's numbers is so stand out when you
think about this is a company with three hundred million
subscribers worldwide, leaving Disney just way behind, less than half
of what they've currently been able to crow about.
Speaker 5 (05:06):
But I think it's just the heavy mix.
Speaker 4 (05:09):
Of being able to offer you the right content at
the right time and the right price format. They're making
big inroads into Latin America and into Europe as well
as into the United States.
Speaker 5 (05:17):
Which really surprised me.
Speaker 4 (05:18):
Was how strong the US and Canada are in the
face of those price heights. But I think most notably
it is the fact that they keep on delivering, whereas
it's carry On is a great movie that people have
flocked to, whether it's these ongoing franchises that people cannot
get enough of Wednesdays coming out with more, we're going
to be getting.
Speaker 5 (05:34):
A new stranger things.
Speaker 4 (05:35):
These are people that a lot loaded on these particular
types of content and the genre that they feel so
comfortable with. And I wonder, and it's one more for
Geetha really is how much we're going to see cyclical
nature of.
Speaker 5 (05:46):
People signing on and signing off when it comes to sports,
because that is.
Speaker 4 (05:49):
What is that the behest and what has so been
the issue for the likes of Warner Brothers and Disney
is that you basically turn on when it's your season
and then you switch.
Speaker 5 (05:57):
Off again and you have this huge jump starts in numbers.
Speaker 4 (06:00):
All were going to see that consistency when you do
have the deals of rule for example, ps my producer
Jackie absolutely loves.
Speaker 5 (06:06):
The new role. So ass you say they're winning on
the WWE front, Keitha.
Speaker 2 (06:10):
Come on in on that talk to us about the
cyclical cyclicality or not nature of sports.
Speaker 5 (06:16):
Yeah.
Speaker 3 (06:16):
No, that's a great point that Caroline brought up, and
we've seen that happen every time during football season, right,
people just sign up for all these services and then
after the Super Bowl you have so much of this
what is called churn and burned.
Speaker 4 (06:27):
Right.
Speaker 3 (06:28):
But that's where I think Netflix is going to do
things a little bit differently. So they're going to use
a combination of these big, splashy events think of you know,
Tyson versus Paul or even the NFL games where you know,
you can go out and acquire all this huge bunch
of subscribers, and then you have you know, consistent weekly
programming like WWE. The next thing that's really coming up
for renewal is UFC, which is again year round programming,
(06:51):
which then you know, forces people to come back week
after week to watch their favorite shows, and I think
that's how they're going to They've always kind of strived
for this nice mix, you know, whether it's English non
English content, you know, whether it's licensed original content, and
now it's going to be you know, kind of this
live sports, the one off events versus you know that
year round programming.
Speaker 1 (07:12):
Githa, before we let you go, you're an analyst for
Bloomberg Intelligence. You cover technology and media. You like having
more data rather than less data. Unfortunately, you're going to
get less data from Netflix moving forward because they're not
going to report this customer metric anymore. What are you
going to use to back out that figure? What should
(07:33):
we be looking at?
Speaker 3 (07:34):
Yeah, definitely, I mean revenue is how they have been
kind of training as revenue growth is going to be
the big number going forward. It's going to be interesting
to see if they give any metrics tim around advertising
at all, because we will kind of need that a
little bit to see if that add our poo number
is climbing up or not. But yeah, we're going to
have to make some guestimates in terms of subscriber numbers.
(07:56):
But yes, revenue and operating margin, I think those are
going to be the major metrics that investors are going
to be focused on going forward.
Speaker 2 (08:02):
Hey, before we go, Caroline, I did want to get
you to weigh in on We are anticipating an announcement
by President Trump and building artificial intelligence infrastructure here in
the United State. It's a big joint venture. We've seen
some stacks like Oracle move on it. What do we
know or what might we expect?
Speaker 5 (08:20):
It's so interesting, isn't it?
Speaker 4 (08:21):
Because it was but a few weeks ago that Masayoshi's
son was on stage with Trump congratulating him on his
presidential win and promising one hundred million dollars into AI infrastructure.
And here we get it, one hundred million maybe going
up to five hundred million dollars with soft Bank, open
Ai and Oracle. There are so many questions here because
what Oracle is going to be stealing some of Microsoft's
lunch here? Because remember open Ai tends to depend on
(08:43):
Microsoft for its cloud infrastructure at the moment. But we
understand from reporting of our own colleagues that there's been
some frustration by open Ai and Microsoft not being able
to build out as quickly as enough as they would
like and having to go elsewhere for their compute power
for their latest large language models. This is exactly what
the President now wants to be laying out money coming in,
particularly from the foreign investment like SoftBank, and committing to
(09:06):
building infrastructure here in the United States, and remember it's
going to have to have the energy that goes alongside it.
But big move for Oracle Stock, big important cloud growth
driver for them. But also really interesting tie up between SoftBank,
which has been taking more and more of a stake
in open Ai by buying up some of those shares
on the private market and tender office coming from employees
and indeed leaving me with questions about Microsoft. But we
(09:29):
do anticipate that unveiling at the White House today.
Speaker 2 (09:31):
All right, looking forward to that great setup for us
as we anticipate that in great analysis from both of you.
When it comes to Netflix, we are watching the stock
continuing to trade soaring really in the aftermarket, up about
eleven percent as we speak. Our thanks to Caroline High,
co host of Bloomberg Technology, and of course our Githa
Rang andath On. She is technology and media analyst for
Bloomberg Intelligence. We'll all be reading her research
Hosts And Creators
Tim Stenovec
Carol Massar
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